Following the recent Scottish Budget, Scottish higher rate taxpayers will see a freeze in the basic rate limit at £43,000, despite the rise for the rest of the UK from the new tax year to £45,000 for those paying the 40p tax rate.

This means that Scottish taxpayers will face a £2,000 lower threshold for higher rate tax in 2017/18, compared with the rest of the UK where the higher rate tax rate kicks in for those earning over £45,000. This will have an immediate impact on earnings for those based north of the border.

For the purposes of section 11A of the Income Tax Act 2007 (which provides for income tax to be charged at Scottish rates on certain non-savings and non-dividend income of a Scottish taxpayer), the Scottish rates and limits for the tax year 2017-18, based on someone in receipt of the standard UK personal allowance, are:  

• the Scottish basic rate is 20%, charged on income above £11,500, up to a Scottish basic rate limit of £43,000;
• a Scottish higher rate of 40%, charged on income above the Scottish basic rate limit of £43,000 and up to a Scottish higher rate limit of £150,000; and
• a Scottish additional rate of 45%, charged on income above the higher Scottish rate limit of £150,000.

The revised P9X, featuring the thresholds set by the Scottish parliament, is available here.